Nafta is an acronym for North American Free Trade Association. Currently, it is a trading bloc with a rocky trade agreement that is shared amongst three countries, namely the USA, Mexico and Canada. Things have been really controversial lately for this trading bloc due to political reasons. The recent election of Trump has sent sent shockwaves to Mexico in terms of the “wall-building” scenario and also Justin Trudeau’s beliefs being incompatible with that of the US leader. This means that the trade agreement stands on rocky and shaking grounds, free trade is taking place between those member countries but tariffs are in there and also freedom of human capital is subject to some rules.

Let’s dive deeper into each country involvement with Nafta, the US for example:

Participation of the US in NAFTA

Donald Trump calls the Nafta the worst trade deal ever signed by the US. So, what he mean by that? He had used this argument during his election campaigns, it is more about the secondary sector, where most manufacturing jobs were being created in Mexico due to labour being cheaper there. Therefore, those jobs were moving from one-member state to the other, therefore creating instability in the US market for the the manufacturing sector due to major factories and plants moving out.

Even though Nafta helps to lift all tariffs for the trading of goods between member countries, it doesn’t mean that the absence of taxes on imports and exports are enough to recalibrate trade between these three countries. The US during the last years has seen the disadvantages and Trump’s observation was that the US citizens and corporations need to understand the impact of their involvement in the Nafta. Nafta was originally signed in December 1992 and came into full effect on the 1st January of 1994.

The aim was to facilitate business across borders, boost economic integration and propel economic prosperity, but has the US benefited from all these three aims? Please check our news section for that to learn more about Canada and Mexico.

Nafta progress and controversies

Controversies & Progress

Each country will experience economic growth in different ways as patterns of growth for each member state in the Nafta is different. This is due to the very composition of those countries. For example, each county has different sectors and not all of them are equal. For example, Mexico relied primarily on the agricultural sector, that is the primary sector but now is even attracting companies from the US to grow in its secondary sector, that is manufacturing sector. Canada, every single year, discovers new land due to ice melting on the northern side of the country and that means that the primary sector is still important with cattlery, farms and more. Canada also needs human capital, so does the US and Mexico. Does that mean human capital distribution is the same for all the three countries. There tends to be controversies around Mexicans crossing the borders to the US and the US citizens crossing the borders to Canada and vice versa. These are issues that are at the center of Nafta discussions and all member states have a strong say in their own sovereign way of running their country laws, economies and people and in that sense Nafta stays controversial in its application.

Deals with Mexico and Canada

USA is the biggest economy in the world and as such tends to have increasing bargaining powers over their counterparts. However, political discussions amongst each country’s political figures have a big hand in getting the right deal for their own nations. As there could be tit-for-tat disputes as well in between presidents, the negotiations in Nafta do take time. Is Nafta necessarily good for each country in the North American region? Who knows.

Mexico and Canada nafta deals
Impacts of NAFTA

The impact of NAFTA

Even though Nafta helps to lift all tariffs for the trading of goods between member countries, it doesn’t mean that the absence of taxes on imports and exports are enough to recalibrate trade between these three countries. The US during the last years has seen the disadvantages and Trump’s observation was that the US citizens and corporations need to understand the impact of their involvement in the Nafta. Nafta was originally signed in December 1992 and came into full effect on the 1st January of 1994.

The aim was to facilitate business across borders, boost economic integration and propel economic prosperity, but has the US benefited from all these three aims? Please check our news section for that to learn more about Canada and Mexico.